Offshore wind power and solar power are the core drives in energy transformation of Taiwan, and among them, the imminent reveal of the regulations for “Block Development”, the third phase in offshore wind power development, is bound to further stimulate a comprehensive industrialization for the local supply chain, and equip the country for its marching into the Asia-Pacific market. While we wait for the announcement of the regulations, let’s take a stroll down memory lane on how offshore wind power in Taiwan was developed from the ground up.
The government is currently in the midst of planning in increasing the installed capacity of renewable energy to 27GW in 2025, and elevating its proportion of power generation to 20%, with offshore wind power as the development focus. The offshore wind power project will commence from scratch, and strive for a total capacity of 5.5 GW in 2025 from the 520 MW in 2020.
First Phase: System Demonstration
The offshore wind power project in Taiwan is divided into 3 major phases of “First Demonstration, then Potential, and Third Block Development”, with Fuhai, Swancor, and Taiwan Power winning the bid in 2013, becoming the pioneers in offshore wind power in Taiwan. As of now, Swancor has established a demonstration wind farm with two 4 MW wind turbines installed, totaling 8 MW, at Formosa 1 that is located at Miaoli offshore, during the first phase in October 2016, which began commercial operation in 2017. Subsequently, a 120 MW offshore wind farm with 30 wind turbines was completed during the second phase in October 2019, which entered commercial operation at the end of that same year, and became the first offshore wind farm in Taiwan.
Taiwan Power, who also established a demonstration wind farm, is currently installing underwater equipment for the first phase of the 109 MW Changhua Fangyuan Offshore Wind Farm. Having completed the installation of steel pipe piles in January, Taiwan Power expects to initiate piling and implement subsequent installations of wind turbines in March, and enter synchronous power generation by the end of 2020, with an estimated 360 million kWh of annual power generation.
In regard to the Fuhai Changhua Offshore Wind Farm, the commercial operation of the site was postponed twice from its initial date of 2015, and its progress was suspended precipitously after having failed to receive approval in development by the Environmental Impact Assessment. Not giving in to the verdict, Fuhai filed for an appeal, which was granted in March 2019, making it the first site that escaped from the fate of demolishment. However, due to the significant delay in the progress of the Environmental Impact Assessment, the Fuhai Wind Farm must obtain establishment and construction permits before the end of March 2019, as well as complete grid construction within 2020, should it wish to retain its demonstration eligibility, otherwise it will be moved to the third phase, block development.
Second Phase: Development of Potential Site
The development of offshore wind power is currently at the second phase “Development of Potential Site”, where a model that prioritizes selection and follows by bidding will be adopted under the criterion of 3.5 GW selection and 2 GW bidding. Placing localization as the primary condition, the second phase also shoulders the obligations in completing local industry chain and infrastructures, including maritime engineering, underwater foundation, towers, and wind turbines, in the hope of invigorating accelerated development for the local offshore wind power industry in Taiwan, as well as facilitating transformation for the existing manufacturing and service industry; in addition, the early localization arrangement will also contribute to rationalizing the price of offshore wind power.
The selection and bidding results were announced respectively in April and June 2018, and created interests for international wind power manufacturers, including Orsted from Denmark, Macquarie Capital from Australia, Copenhagen Infrastructure Partners (CIP) from Denmark, Yushan Energy from Singapore, and Northland Power Inc. (NPI) from Canada, to invest in Taiwan.
Also divided into two processes, the first wave of the selection segment does not require localization, for which the 378 MW Formosa 2 of Swancor and Macquarie Capital, and the 350 MW Yunneng Wind Farm of WPD, have received eligibility in development, and they must complete parallel circuit in 2020, with a grid capacity of 3,098 between 2021 and 2025. The second wave includes the 708 MW Liwei and Yunneng Wind Farms of WPD, 900 MW Greater Changhua Southeast and Southwest Wind Farm of Orsted, 600 MW Changfang and Xidao Wind Farms of CIP, 300 MW Zhongneng Offshore Wind Farm of China Steel, second phase of the 300 MW wind farm by Taiwan Power, and the 300 MW Hai Long 2 Offshore Wind Farm of NPI and Yushan Energy, with a total capacity of 3,836 MW when the two waves are combined.
Bureau of Energy, Ministry of Economic Affairs, also completed the bidding of a 1,664 MW offshore wind farm in June 2018, for which Orsted received 920 MW, and NPI received 744 MW. The selected bidding price was between $2.2245/kWh and $2.5481/kWh, which is half of $5.0946/kWh from the 2020 feed-in tariff, and is even lower than the average electricity price of $2.6/kWh. The aforementioned wind farms must complete construction within 2025.
Various developers are currently in full swing at signing contracts with domestic suppliers to fulfill the promise on localization, which to Taiwan, is an opportunity to retain the experience and technology from the developers in the country. Situated within the earthquake zone, Taiwan is hit with earthquakes and typhoons ever year, and by resolving these natural obstacles, technology transfer is once again possible, which allows the country to transform into a significant offshore wind power hub in Asia-Pacific.
Third Phase: Block Development
Another highlight after 2025 lies on the third phase of “Block Development”. Ministry of Economic Affairs announced that a policy regarding 10 GW block development will be established for 10 years between 2026 and 2035, with 1 GW of installed capacity every year in the future, where the selection process can start as soon as end of this year or first quarter next year. Pointed out by the Bureau of Energy then, the bidding price on the 10 GW block development will be lower than the average selling price of electricity in the next 10 years, according to the global trends and the development of offshore wind power in Taiwan.
Nevertheless, details regarding the scale of the block development are yet to be announced. Initially set to be announced at the end of 2019, it was delayed to the first quarter after being postponed to the beginning of 2020 due to the inability to come to a consensus, the complex inspection procedures for localization, and the 2020 Taiwanese Presidential Election. The repeated delays for the announcement of regulations represents a cautious and prudent attitude endowed on the third phase, and the necessity of gathering more opinions to agglomerate consensus.
(News source: TechNews; Cover photo source: shutterstock)